Preliminary Results for year ended 31 March 2010

27 May 2010

Restoring QinetiQ to Strength

2010 2009
Business Performance
Revenue £1,625.4m £1,617.3m
Organic change at constant currency (3)% 7%
Underlying operating profit* £120.3m £151.6m
Underlying operating margin* 7.4% 9.4%
Underlying profit before tax* £85.7m £130.2m
Underlying net cash from operations* £174.3m £169.8m
(post capex)  
Underlying cash conversion ratio* 145% 107%
Net debt £457.4m £537.9m
Underlying earnings per share* 11.1p 15.9p
Dividend per share 1.58p 4.75p
 
Statutory Reporting
Operating (loss)/profit £(25.3)m £128.1m
(Loss)/profit before tax £(66.1)m £114.0m
Earnings per share (9.7)p 14.3p

Headlines

Difficult year – sales disappointing, margins weakened;
Markets remain challenging;
Review of operations complete – priorities agreed;
Programme underway to restore QinetiQ to strength over next two years;
Immediate drive on debt reduction to reduce net debt:EBITDA from 2.5x+ to a target of below 2x+ by decisive internal programme to restore value; and
Board recommending suspension of dividend for 12 months.

Leo Quinn, Chief Executive Officer of QinetiQ Group plc, said “This has been a difficult year for QinetiQ, with challenging conditions in our core markets and considerable internal change.

Our markets are likely to remain uncertain for some time, but we now have a decisive programme of self-help to restore value. We are acting to make our costs more competitive, our productivity better and our debt lower. We are changing our structure to benefit from QinetiQ’s overall strengths. Most of all, we are working to transform our culture into one based on leadership, accountability and empowerment of what is an outstanding group of people.

With these immediate steps, the Board believes that it will meet its expectations for the current year. At the same time our goal is to build the right foundation for a return to profitable and sustainable growth in the future.

Definitions of underlying measures of performance can be found in the glossary on page 21. Underlying financial measures are presented as the Board believes these provide a better representation of the Group’s long term performance trends. Specific non-recurring items include amounts relating to gain on business divestments, impairments of goodwill, intangibles and investments and EMEA reorganisation costs.

Prior year comparatives have been restated to show the finance elements of the IAS 19 pension cost in the finance income and expense lines. There is no impact on reported profit before tax from this restatement.

+ The gearing ratio (adjusted net debt:EBITDA) is the ratio of net borrowings at the balance sheet date translated at average exchange rates for the period, to EBITDA generated in the 12 month period to balance sheet date, annualised and calculated in accordance with the Group’s credit facility ratios.

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QinetiQ People Who Know How
Preliminary Results for year ended 31 March 2010